Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the provision for income taxes are as follows:

	For the Year Ended December 31,
(in thousands)	2024		2023		2022
Current:
Federal	$	56,879	$	34,600	$	31,683
State	17,907		5,602		7,141
Foreign	2,300		2,002		1,708
	77,086		42,204		40,532
Deferred:
Federal	(7,407)		(1,936)		(4,003)
State	(2,618)		(338)		(1,022)
Foreign	(813)		(686)		(855)
	(10,838)		(2,960)		(5,880)
Provision for income taxes	$	66,248	$	39,244	$	34,652

The following is a reconciliation of income taxes at the statutory tax rate to the Company's effective tax rate:

	For the Year Ended December 31,
	2024		2023		2022
Federal taxes at statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	2.4		2.1		2.5
Uncertain tax positions	2.9		0.2		0.3
Research and development tax credit	(0.5)		(0.7)		(0.7)
Federal permanent items	—		0.3		(0.2)
Effect of foreign operations	0.1		0.3		—
Other	—		0.1		(0.7)
Effective tax rate	25.9	%	23.3	%	22.2	%

At December 31, 2024, we had $10.3 million of unrecognized tax benefits, all of which would affect our effective tax rate if recognized.

The following table summarizes the change in unrecognized tax benefits for the three years ended December 31:

	For the Year Ended December 31,
(in thousands)	2024		2023		2022
Balance at beginning of year	$	4,539	$	3,856	$	1,204
Reductions due to lapses in statutes of limitations	(174)		(716)		(139)
Reductions due to tax positions settled	(180)		—		—
Additions related to positions taken during a prior period	—		—		2,136
Reductions due to reversals of prior year positions	(1,125)		—		—
Additions based on tax positions taken during the current period	7,253		1,399		655
Balance at end of year	10,313		4,539		3,856

We recognize interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of interest and penalties related to unrecognized tax benefits recorded within tax expense was $3.1 million for the year ended December 31, 2024, and was immaterial for the year ended December 31, 2023. As of December 31, 2024, accrued interest and penalties related to unrecognized tax benefits were $3.5 million.

The Company does not anticipate material changes in the amount of unrecognized income tax benefits over the next year.

Deferred income taxes result from timing differences in the recognition of revenue and expense between tax and financial statement purposes. The sources of temporary differences are as follows:

	December 31,
(in thousands)	2024		2023
Assets:
Inventories	$	15,111	$	17,829
Accounts receivable	24,723		20,472
Operating lease liability	31,850		26,261
Accrued expenses	10,932		7,002
Capitalized research and development expenses	16,840		12,263
Net operating losses	295		289
Foreign tax credits	469		469
State tax credits	427		379
Capital loss carryforward	474		478
Total deferred tax assets	101,121		85,442
Valuation allowance	(1,429)		(1,354)
Net deferred tax assets	99,692		84,088
Liabilities:
Depreciation	12,938		16,481
Goodwill and intangible assets	52,564		49,798
Operating lease right of use asset	30,146		25,142
Other	1,958		1,592
Gross deferred tax liabilities	97,606		93,013
Net deferred tax assets (liabilities)	$	2,086	$	(8,925)

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carryback and carryforward periods, and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of the deferred tax asset. Management has determined it was necessary to establish a valuation allowance against the foreign tax credits, various state tax credits, and a capital loss carryforward.

Based on our history of taxable income and our projection of future earnings, we believe that it is more likely than not that sufficient taxable income will be generated in the foreseeable future to realize the remaining net deferred tax assets.

During 2024, we increased the valuation allowance against the deferred tax assets noted above by an immaterial amount.

As of December 31, 2024, the Company has tax-effected net operating loss carryforwards of $0.2 million and $0.1 million for U.S. federal and state jurisdictions, respectively. Tax-effected federal net operating losses of $0.1 million begin to expire in 2036. The remaining federal net operating losses do not expire. The state net operating loss carryforwards expire in various years starting in 2037.

We file income tax returns in the United States, Canada, China, India, and Mexico. The statute of limitations for tax years before 2021 is closed for U.S. federal income tax purposes. The statute of limitations for tax years before 2017 is closed for the states in which we file. The statute of limitations for tax years before 2021 is closed for income tax purposes in Canada, China, and India. The statute of limitations for tax years before 2019 is closed for income tax purposes in Mexico.